The tax season is in full gear as facilities are provided to guarantee more yields, Sherine Nasr reports It is time for taxpayers to pay their dues and the Egyptian Ministry of Finance is not sparing any effort to remind them of that fact. Large taxpayers have been urged ahead of time to submit their tax returns. Televised awareness campaigns are broadcast at peak hours. This year's trend is so stretched that it's funny. SMSs have been sent out to mobile phone users, indicating that taxes are due, with their deadline on 31 March. Many have received these short memory refreshers not just once or twice, but three times. As for companies, they still have the luxury to review their tax returns for a few weeks longer, as the deadline for corporate income tax is April. In light of the current financial climate, there is no doubt the ministry is more determined than ever to regulate taxation. Although Minister of Finance Youssef Boutros Ghali was quoted as saying that tax revenues may shrink this year due to the prevailing economic slowdown, estimated tax revenue of no less than LE140 billion from income tax -- LE91.4 billion -- and sales tax -- around LE49.6 billion -- is planned to enter the state's coffer for financial year 2008/09. Notably, tax revenues have grown steadily since the current tax law was implemented starting 2005. "Although taxes have been slashed by half, revenues have increased regularly," commented Said El-Hendawi, head of the Large Taxpayers Centre (LTP) at the Egyptian Tax Authority. According to a statement released by the ministry early this week, income and sales tax revenues were estimated at LE165 billion in 2008, compared to LE65 billion in 2005. Despite fears that taxpayers would fail to meet their deadline this year due to the economic crunch, business at tax bureaus continues as is usual at the moment. Two days before the deadline, the LTP received 1.6 million tax return statements of natural persons while another 1.4 million return statements rushed to designated tax bureaus. "This has been the norm every year. Taxpayers rush to deliver their tax returns only one day before the deadline," said El-Hendawi, adding that tax return statements can now be posted by mail, sent via Internet or delivered personally to one of 227 tax bureaus or 25 chambers of commerce across the country. It is interesting to know that out of three million taxpayers, 2,000 alone are responsible for delivering at least 82 per cent of the total income tax revenues and 53.5 per cent of the sales tax revenues. This year's last minute rush, however, was not without reason. A few weeks ago, Ghali introduced to the cabinet a draft law by virtue of which income tax for the fiscal year 2008/ 09 would be divided into three instalments. The initiative is aimed at encouraging the tax society, particularly major clients, to pay their due by adopting a flexible method for compliance in hard times. Taxpayers were hoping to see the draft law endorsed by the People's Assembly before 31 March. Many preferred to wait and see which caused a state of anticipation and finally led to some delays. Still the initiative was welcomed by the business society in Egypt which took it as a sign of good will on part of the government. Among them is Hussein Sabour, chairman of the Egyptian Businessmen's Association. However, he also argued that such facilities will only be effective as an incentive if certain measures are taken to guarantee that businesses benefiting from the law will not lay off labour. "Keeping labour on is part of the social responsibility of the business society in Egypt," he said. As a matter of fact, paying taxes in instalments was an old trend applied by the tax authority before the inception of the present tax law to ensure that taxpayers would not default. "This year, however, tax collectors were instructed to receive part of the due taxes once delivered even before the law was officially endorsed," said El-Hendawi, who added that the ministry is keen to adopt the same solid relationship based on initiating trust with taxpayers, as it has in past years. Although no further details about the proposed law have been released, it is expected that instalments will be due no later than during March, April and May. The reason, according to El-Hendawi, is that taxes should be collected before the end of the fiscal year 2008/09, in June. The proposed law is one of an extended series of other measures that have been taken to maintain a tighter grip on the tax society in Egypt. Among these was merging the sales tax and income tax authorities into one entity in 2006. Accordingly, data on tax payers is available from both bodies for the sake of more transparency and less likely defaults. In the meantime, accounting rules for the taxation of small and medium-sized enterprises (SMEs) are now being laid out by the ministry in an attempt to broaden the base of the tax society and include more activities under the taxing umbrella. Therefore, SMEs whose capital is LE50,000 or more, or those with an annual net profit of LE20,000 or more, will have to keep records of their accounts. "Those with smaller business activities will be taxed according to private agreements, specially tailored for them," said El-Hendawi.
